2024 (8) TMI 413 - AT - Customs

Confiscation of the imported goods - imposition of redemption fine under section 125 and imposition of penalty under section 114A of the Customs Act, 1962 - classification of the imported goods - men s woven quilted/padded polyester polyfill (unpopular brands) - Applicability of Section 28(4) of the Customs Act, 1962 for recovery of differential duty - HELD THAT - In this case, assessment under section 17 and the issue of order clearing the goods for home consumption under section 47 were not completed. Since all the events in this case happened before the goods were cleared for home consumption, it was still a process of assessment even though the Joint Commissioner did the assessment instead of letting the proper officer do it in the normal course. The respondent did not challenge before us through any cross appeal the assessment of duty. In fact, the respondent also paid duty as per the assessment. Since section 28(4) does not apply in this case neither would be the imposition of penalty under section 114A. In a nutshell, this is a simple case of assessment on first check basis on the request of the respondent importer but before the proper officer could get the goods examined and complete the re-assessment in the normal course, the Customs (Preventive) Officers intervened, took over and the Joint Commissioner (Preventive) completed the assessment. It is certainly not a case where the officers of Commissioner of Customs (Preventive) detected any fraud or mis-declaration. Section 28(4), section 111(m) and section 114A do not apply to this case at all. The Commissioner (Appeals) was correct in setting aside the confiscation and penalty through the impugned order. The impugned order upheld - the appeal filed by the Revenue is dismissed with consequential relief, if any, to the respondent.

Issues Involved:
1. Confiscation of imported goods under Section 111(m) of the Customs Act, 1962.
2. Imposition of redemption fine under Section 125 of the Customs Act, 1962.
3. Imposition of penalty under Section 114A of the Customs Act, 1962.
4. Applicability of Section 28(4) of the Customs Act, 1962 for differential duty recovery.

Issue-wise Detailed Analysis:

1. Confiscation of Imported Goods under Section 111(m):

The Revenue challenged the Commissioner (Appeals)'s decision to set aside the confiscation of goods under Section 111(m). The Tribunal noted that the respondent had filed a Bill of Entry and requested a first check for classification due to uncertainty about the classification of the imported goods. The Customs (Preventive) officers intervened based on intelligence and conducted an examination before the proper officer could complete the assessment. The Tribunal found that the total number of jackets matched the declaration in the Bill of Entry, and the goods were correctly classified based on the Textile Committee's opinion. However, the Tribunal emphasized that the Textile Committee, while an expert on textiles, is not authorized to classify goods under the Customs Tariff. Classification should be done by the importer or the proper officer, not by an external expert. The Tribunal concluded that the Joint Commissioner misunderstood the scope of Section 111(m), which pertains to discrepancies in value or particulars in the Bill of Entry, not differences in classification opinions. Therefore, the Commissioner (Appeals) was correct in setting aside the confiscation.

2. Imposition of Redemption Fine under Section 125:

The Tribunal upheld the Commissioner (Appeals)'s decision to set aside the redemption fine under Section 125, as it was a consequence of the incorrect confiscation under Section 111(m). Since the confiscation itself was not justified, the imposition of redemption fine was also unwarranted.

3. Imposition of Penalty under Section 114A:

The Revenue argued that the penalty under Section 114A was justified due to the respondent's wilful suppression of facts to evade duty. However, the Tribunal found that the respondent had sought a first check for classification and had not yet cleared the goods for home consumption. The Tribunal emphasized that Section 28(4) and Section 114A apply when there is a demand for duty due to non-levy, short-levy, or short-payment after the goods have been cleared for home consumption. Since the assessment process was still ongoing and the goods were not yet cleared, the imposition of penalty under Section 114A was not applicable. The Commissioner (Appeals) was correct in setting aside the penalty.

4. Applicability of Section 28(4) for Differential Duty Recovery:

The Tribunal clarified that Section 28(4) deals with cases where duty was not levied, not paid, short-levied, or short-paid after the goods have been cleared for home consumption. In this case, the assessment process under Section 17 was not completed, and the goods were not cleared for home consumption. Therefore, the demand for differential duty under Section 28(4) was not applicable. The Tribunal emphasized that the proper procedure for assessment and re-assessment should have been followed, and the intervention by Customs (Preventive) officers was premature. The Commissioner (Appeals) correctly set aside the demand under Section 28(4).

Conclusion:

The Tribunal upheld the Commissioner (Appeals)'s order, setting aside the confiscation, redemption fine, and penalty imposed by the Joint Commissioner. The appeal filed by the Revenue was dismissed, and the Tribunal emphasized the importance of proper assessment procedures and the limitations of Sections 111(m), 114A, and 28(4) in this case. The judgment reinforced the need for assessments to be conducted by authorized officers and not external experts, and clarified the applicability of various sections of the Customs Act in the context of ongoing assessment processes.

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